San Marcos approves incentive for Amazon fulfillment center

Amazon deliveries may be coming much faster for Hays County residents after San Marcos City Council’s July 21 meeting.

City Council unanimously voted to approve an incentive for Amazon to locate a fulfillment center on McCarty Lane in the city. In return, the company must employ at least 350 people at the center.

“We’re all excited about this possibility with Amazon’s interest in our community,” Mayor Daniel Guerrero said. “San Marcos is at this point the finalist.”

With the approval of the incentive by the city, the proposal will move back to Amazon for final approval. Adriana Cruz, president of the Greater San Marcos Partnership, said a final decision should be expected in late August.

Amazon plans to invest $60 million in improvements to the building on McCarty and add another $131 million of personal property, equipment, furniture and inventory to the building.

Under terms of the incentive, Amazon must employ at least 350 people at the center. In return, the city will refund to the company 85 percent of its ad valorem taxes on personal property and 40 percent of ad valorem taxes on real property for 10 years. The city will also rebate a sliding scale of sales taxes realized by the city from the project over the first 20 years of the project. Sales on online goods are not currently taxed by the entity from which those sales are generated.

If Amazon maintains at least 1,000 jobs during five of the first 10 years of the agreement, the company may opt to extend the term of the tax rebate agreement an additional five years. The company must then maintain 1,000 jobs throughout the extended period.

The company would be required to maintain annual payroll of at least $11.28 million under the 350-job model. In the event they hire 1,000 people they would be required to maintain payroll of $32.24 million. City Manager Jared Miller said the company plans to have about 60-70 managerial jobs under the 1,000-job model.

Lee Higgins, a tax incentive consultant working with Amazon through the negotiations with the city, said the incentives offered by the city will go toward making the company’s processes more efficient and improving delivery of products.

“You can do as well as you want to do,” Higgins said. “It’s based on your performance. If you really want to work hard you can move up quick. There is a lot of opportunity.”

The company also offers assistance for employees interested in pursuing higher education.

“The manner in which the [GSMP] staff, city staff and the county and the business community have come together to help prepare a very fast-paced process worked tremendously,” Guerrero said. “Whenever a community is pursuing and is being considered by a world-renowned entity like Amazon, it’s rare you see this type of cooperation and collaboration.”